£23 billion of benefits are not paid in the UK a year. Why is it that finding those who are due to be paid is not a national priority?
This is the audio version:
This is the transcript:
There's a lot of furore in politics about the fact that the cost of benefits is becoming uncontrollable and out of control as if we are going to be sunk by the fact that we have people who need help in our society. I don't think that's true, of course. I think it's the job of our society to help those people who need assistance to deal with the ordinary stresses of everyday life, including the need for a sufficient income.
So, I'm not terribly sympathetic with those who are saying, for example, that disability benefits are now unaffordable, as the House of Lords has recently done, and those who are saying that we need to curtail the expenditure on these as the Tories did towards the end of their period in office, and which Labour is also trying to do, to save £3 billion a year.
Instead, what worries me is something quite different when it comes to benefits. In April last year, it was estimated that £23 billion worth of benefits that were owed to people in this country were not paid in the previous year.
Think about that. £23 billion worth of money that would have assisted the most vulnerable members of our society was not paid because the government did not go out of its way to find who had not claimed, and it doesn't, as a matter of fact, see it as its job to go and find people who have not claimed benefits.
They see it as their job to persecute those who have over-claimed benefits, and let me be clear: I am not at all sympathetic with those who abuse the system and claim fraudulently.
But let's also be clear: the scale of that problem is relatively modest - two billion or so a year at most of over claims, matched by as many mistakes by benefit agencies in over-payments made. This is a complex world where mistakes will happen.
But those numbers are totally and utterly insignificant compared to £23 billion of unpaid benefits. In other words, these are sums that the government recognises that people need in order to live well, which they aren't getting.
Roughly one-third of that sum - and the chart that shows the breakdown is going to be on your screen - one-third of that sum relates to universal credit, the basic benefit that people get. So, around £8 billion a year is unpaid there, and that means that families are literally going to be struggling to make ends meet as a consequence.
The next biggest one is council tax support. Fifteen per cent of that total of £23bn, or in other words, over £3bn is support not provided to people who should be on discounts because they are on other benefits but who are nonetheless paying a full council tax bill and who are suffering as a result. This is penal taxation to which they're being exposed as a consequence of not claiming this benefit.
And look at the other ones. There's carers allowance not being paid - £2 billion a year.
There's pension credit not being paid - at least £2 billion or more a year. That benefit is difficult to claim because the guidance on who and who does not benefit is so difficult to interpret.
These are the consequences of having a system where the barriers to claiming are put in place by the government and are deliberately left there so that underclaims take place. After all, if a government is worried about overpaying disability benefits by £3 billion, which it says it can't afford, it would be petrified by the idea of paying out the full liability that it has owing.
But let's swap this story around. Suppose we were now talking about the government deliberately over-collecting £23 billion of tax. What would people say? Would they be angry? Of course, they would be. How dare you take too much money from me! But that's exactly, in a sense, what's happening here. People are not getting the money they're entitled to. And so, we should be equally angry because these people need that money to live.
Again, don't get me wrong. I know that there will be some people who will be claiming undue benefits. I do not condone that. But that's got nothing to do with this. This is about not paying benefits to which people are entitled.
If we had a fair government, a compassionate government, a caring government, a government that wanted to make lives better, a government that wanted to deliver growth - because the people who get this money will spend it back into the economy, meaning that it will boost economic activity and will result in more tax paid, therefore recovering quite a significant part, if not all, of the sum paid - if we had those things, we would have a government that tried to work out who has not got these benefit payments and would try to make payment to those people. That is my belief.
If you want a use for AI in the economy that we have, then identifying those people who are not getting the benefits to which they are entitled would, to me, be one of the best uses of AI I could imagine. But is that going to be the use that the government's going to put it to? No. They're going to put it, apparently, to use to identify tax avoiders. Good luck, because I don't think it'll work very well. They are probably going to use it to identify benefits cheats.
But, are they talking about making sure that people get the benefits to which they're entitled? I've not heard that.
This is a scandal. This is a government that doesn't care at work. And this is something that needs to change.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Professor Paul Spicker has a lot to say about this.
He thinks that it is the means testing that is part of the problem to name but one, and a lack of universality, which points to a rather odd attitude to those who need help, compared to those who do not need help, as you allude so correctly in your post.
Great post BTW.
Thanks
Agreed. A universal basic income would be relatively simple to administer and has many proven benefits (as demonstrated by almost every trial which has taken place). Benefits include improved mental health, increased entrepreneurial activity, improved food security, reduced stress, and better physical health, housing, education, and employment. A transformation as huge as the creation of the NHS — and apparently as politically challenging, sadly.
Unfortunately, it also requires very high marginal tax rates at quite low levels of income. It is not going to happen fir that reason,
@Richard You may be correct, but until the full numbers are run, can we be sure? And anyway, doesn’t high marginal tax rates above basic income levels sound like a more equal world?
I have done the numbers.
https://openaccess.city.ac.uk/id/eprint/16544/1/2013_Policy_Paper_Financing%20the%20Social%20State-_Richard_Murphy__Howard_Reed_%28Social_State_-_Idleness.pdf
It is not enough that we punitively sanction people who make mistakes with their benefits claims, withdrawing the amounts we deem the minimum necessary.
Now the suggestion is that “benefits cheats” should be punished by withdrawal of driving licences. I’m sure that will help people get off benefits and into remunerative jobs.
I am no defender of fraud or fraudsters, but as you say the amounts that are over claimed are small in relation to the amounts that go unclaimed. Or indeed the amounts lost to the public purse through tax avoidance and evasion. Even if we accept HMRC’s figure, the “tax gap” is £40 billion.
Surely each time the rhetoric and punishments are ramped up against “benefits cheats”, exactly the same rhetoric and punishments should be pointed at those who avoid or evade their duty to come contribute to the public purse through taxation. They are robbing us all. Take away their driving licence. Sauce for the goose. But if not, why not?
I am appalled by this one.
Despite constantly claiming that its aim is to grow the economy, the government seems determined to ignore the point that you make here, Richard, and continually make, that ‘…the people who get this (government) money will spend it back into the economy’. i.e. boost growth! Why do they not know this fundamental economic fact?
I wish I knew.
One question is how much does it cost the Gvoernment to identify, catch, and deal with benefits fraudsters? Probably more than whatever they cost them.